Eaton Fire Poses Credit Risk to Southern California Edison

The Eaton Fire in Los Angeles County may threaten Southern California Edison's credit due to lawsuits alleging its equipment sparked the blaze, Moody's warns. Investigators haven't confirmed the cause of the fire that burned 14,000 acres. Future evidence could impact the company's financial stability amid fire-related cost recoveries.

The ongoing Eaton Fire in central Los Angeles County has emerged as a potential credit risk for Southern California Edison, as highlighted by Moody's Ratings in a recent report. The power provider operates electrical lines in the region where the fire first ignited.

While the cause of the Eaton Blaze, which has scorched over 14,000 acres since January 7, remains under investigation, Southern California Edison (SCE) faces several lawsuits. These legal actions claim that the utility giant's equipment was responsible for the initial outbreak of the deadly fire. SCE, a subsidiary of Edison International, maintains there is no evidence of their equipment being the source.

Moody's suggests that a state wildfire fund, along with mechanisms for California utilities to recoup fire-related expenses, could bolster SCE's creditworthiness. However, this could change if substantial proof indicting SCE's infrastructure emerges, potentially exposing the company to more lawsuits. Additional financial risks include the depletion of the wildfire fund and diminishing regulatory or political support for utilities in California.

(With inputs from agencies.)